What is a Conventional Loan?
Lower rates with more flexibility
A conventional mortgage refers to any loan that is not insured or guaranteed by the federal government, as opposed to government-insured loans including Federal Housing Administration (FHA), U.S. Department of Veteran Affairs (VA) and U.S. Department of Agriculture (USDA). Conventional mortgages (whether conforming or not) typically have a slightly higher down payment than government loans; however, this loan option normally provides more flexibility with fewer restrictions.
Conventional Highlights
If you have good credit and stable income, a conventional loan might be the right option for you since it offers:
- Lower interest rates for borrowers with good credit
- Flexible mortgage insurance options
- Fewer penalties and fees
- Flexible loan terms
Conventional Loan Programs
Adjustable-Rate Mortgage
An adjustable-rate mortgage (ARM) is a loan term option with interest rates that can change periodically after the initial fixed-rate period. After this introductory period, monthly payments are susceptible to increases or decreases based on market fluctuations, which can also affect the monthly payment. An ARM could be the right choice for you if you plan on staying in your home for just a few years, you’re expecting a future pay increase, or the current interest rate on a fixed-rate mortgage is too high
Fixed-Rate Mortgage
Fixed-rate mortgages protect you against rising rates since the interest rate remains the same for the entire term of the loan. Plus, you have the option of selecting a 10, 15, 20, 25 or 30-year term. The main difference is the lower term options have higher monthly payments, which also means you are building home equity faster. Keep in mind you can use equity as a down payment for your next home or a future cash-out refinance. If you plan on staying in your home for a longer time frame, a fixed-rate mortgage could be the right solution for you.
Jumbo Mortgage
A jumbo loan, or non-conforming mortgage, allows you to purchase more expensive homes with a loan amount above the conforming limit set by the Federal Housing Finance Agency. In most areas of the country, the conventional conforming loan limit is $510,400; however, the limit is $765,600 in higher cost areas. If you have a low debt-to-income (DTI) ratio and a higher credit score, but you don’t have enough funds to bring the loan amount under the conforming limit, a jumbo loan might be the right option for you.
Other Loan Options
VA LOAN
Best if you are active-duty military, a veteran or military spouse.
FHA
Best if you are a first-time homebuyer or have a limited amount of funds for a down payment.
Jumbo
Best if you are wanting to purchase a property above the conforming loan limits ($453,100 in most areas).
Carson Paiz
Elite Group Mortgage Expert
Kim Deaner2022-07-18Ashley and Heston were so helpful! And got me into my own home fast!
Russell Waganer2022-06-16Jennie answer all my questions. There was a lot I didn't know but jennie helped out 100% I was very lucky to have her as my loan officer. I an very satisfied and would recommend her to everyone that needs a home loan.
Teri Heffner2021-12-02Ashley is amazing and will go above and beyond to help people out. She is always willing to work with you, stays flexible, and is kind and respectful to any situation. I will keep going back to her over and over.
Sharla Carpenter2021-11-30The process for refinance was very efficient and did not take long to complete. Loved working with Jennie through this process. She was very professional, informative, kind and caring.
Rommel McClaney2021-11-24Very knowledgeable and very responsive! 6 months later and I'm still pleased with how Fairway worked with me!
Ashley Moon2021-11-22Working with Alfredo at Fairway was very smooth from start to finish. He was always available to answer questions and keeps you informed during the entire mortgage process. Extremely casual and not intimidating. Very pleased!
Nick Swofford2021-11-22I worked with rylie and he exceeded my expectations! Always there when I had a question! Reliable, honest and trustworthy! You won't be disappointed.
Elite Group Mortgage offers home purchase and refinances loans. We are headquartered in Grand Junction, Colorado. Elite Group Mortgage is dedicated to helping you achieve your home financing goals. Equal Housing Opportunity.
